Pabst Brewing general manager and president Matt Bruhn believes mainstream beer is facing a “Kodak moment,” just not in the traditional sense.
“We’re at a Kodak moment where the consumer demand is upending the industry,” he explained. “Now if you only have the ability to produce mainstream beer, you’re going to get caught short.”
Much in the way Kodak got caught as consumers shifted away from film to digital, the beer industry is evolving. According to Bruhn, over the next five to six years, the shift away from mainstream beer, which accounted for 63% of the beer category in 2019, will become more dramatic. He believes by 2025, mainstream beer’s share of the market will be around 36%, with FMBs and hard seltzers holding as much as 27% of the market.
The change is already accelerating. Bruhn noted that at the outset of the pandemic, mainstream beer was 56% of the market. Seven months later, it’s around half of the market.
“They’re headed down very quickly, and more than likely, domestic beers, the actual brands, many of them will die,” he said. “And only those who are adding value should survive.”
What it means for Pabst is a redefining of its purpose.
“We are redefining ourselves as an enhanced drinks business, not a cheap beer company,” Bruhn said. “We don’t do beer. We’re making enhanced drinks.”
Those enhanced drinks will be both alcoholic and non-alcoholic, with Pabst pushing in new directions, with more participation in growth categories such as craft, FMBs and seltzer.
“Domestic sub-premium has been the anchor of the business for many years, but that category has been and continues to be in precipitous decline,” Bruhn said. “So the idea is we need to migrate our business … into growth spaces.
In 2020, 17% of the company’s business will come from FMBs, seltzers and craft, Bruhn said. Heading into 2021, he projects those products could account for 23% of the company’s business.
“So within two years we will have shifted dramatically a percentage of our business coming from future growth spaces,” Bruhn said.
Even with the shift toward growth products, Pabst Blue Ribbon remains at the core of the company’s business, with a goal of positioning the brand and the company’s ”American classics,” such as Lone Star, Rainier, Old Style and Old Milwaukee in ways that they’re not competing with one another in price point, positioning and innovation strategy.
“Slowly but surely, we’ve tried to shift those brands away,” Bruhn said. He offered examples, like positioning PBR in the Pacific Northwest as an urban, city brand, while Rainier embraces the outdoors. In Texas, Lone Star is uniquely “Texan,” while PBR is about creativity.
“All other brands that we own become flankers to PBR, so nothing directly competes or attempts to compete with PBR,” he said. “And that’s a that’s a long-range, multi-year strategy.”
Pabst is looking to take its classic beer brands and evolve them into incremental innovation machines, Bruhn added.
Beyond products, Pabst is leaning into embracing the larger shifts in the industry, attempting to recruit a more diverse drinker base, from people of color to women, Bruhn said.
Recently, Bruhn shared Pabst’s plans for 2021 with Brewbound.
Grabst a Pabst Campaign to Continue
Bruhn called 2020 a “breakout year” in terms of media for the Pabst brand. The “Grabst a Pabst” TV advertising campaign hit major media markets. Bruhn said the campaign has “crushed it.” Where those advertising investments were made, the company has seen “significant” velocities compared to markets where the campaign didn’t run.
The effort now is to continue building out the company’s distribution, as well as “building great advertising for awareness and then continue to build up where we can cultural marketing in the right places and spaces based on what’s happening with socialization moving forward,” Bruhn said.
Pabst Blue Ribbon Hard Coffee and Cold Brew
Pabst’s move into the hard coffee space has been a “rip-roaring success,” Bruhn declared.
The company now has two hard coffee FMB offerings: Pabst Blue Ribbon Hard Coffee and Pabst Blue Ribbon Cold Brew, which launched earlier this month.
“We are really all in on the hard coffee space because there’s a huge consumer appetite for it,” Bruhn said. “An average American drinks three cups of coffee a day and RTD non-alcoholic coffee is exploding, so we have a huge innovation pipeline lined up behind coffee.”
In 2021, Pabst will launch a hard coffee variety 8-pack featuring four different flavors: mocha, salted caramel and hazelnut hard coffee, plus the original version.
What has Pabst learned about the hard coffee drinker so far? The brand is attracting younger coffee drinkers, who skew more female than Pabst’s core beer brands. And nearly a quarter of consumers who buy PBR Hard Coffee buy it again.
As for the PBR beer line extensions, Bruhn called low-calorie, lower-ABV Easy “sub-successful,” while PBR Extra (6.5% ABV) was “pretty successful.” The non-alcoholic PBR exists to attract older consumers who no longer drink.
Pabst Plays in the Sub-Segments of Seltzer
Pabst was a first mover into the hard tea seltzer sub-segment, which Bruhn classified as “incredibly successful” in test markets. The tea seltzer will roll out to more markets in variety 12-packs in 2021, and will face competition from market leader Truly, which is launching a tea line extension.
Pabst also launched an 8% PBR Harder Seltzer, which was hampered in the spring due to the pandemic scuttling resets. The brand’s variety 12-packs are now being targeted at the convenience channel. Bruhn said Harder Seltzer is meant to appeal to college-aged consumers looking for a “party starter.”
Rainier Brand Extended to Gin
The Rainier brand has posted double-digit growth this year, leading to out of stock issues every week, Bruhn said.
“For some reason, COVID, lockdown in the Pacific Northwest, people have just gone nuts for Rainier,” he added.
In 2021, Pabst will push forward with the Rewild the Rainiers campaign and also look to expand distribution of the brand, Bruhn said. The company will also look to grow its botanical Rainier Mountain Fresh Gin, which is distilled in Seattle. Bruhn said Rainier was the right fit to authentically extend into gin, as Mount Rainier has juniper trees growing on the mountain.
Bruhn added that the PBR branded whiskey generated a lot of buzz, but he admitted that it has been difficult to get the spirits portfolio rolling. In addition to Rainier’s gin, the company has also launched Olympia Vodka.
“We’re getting a full spirits portfolio built up, and probably next year we’re going to start putting a little bit more effort behind getting these going but the business is fine,” he said. “The products themselves, our consumers do enjoy. So we need to win more points of distribution.”
Lone Star is Also Getting A Seltzer
Pabst is launching a Lone Star branded seltzer line made with agave. The seltzer will launch with two flavors — Agave Watermelon and Agave Lime — with others to follow. Those offerings are being made at Lake Travis Brewing, which Bruhn said makes them “Texas made, Texas seltzers for Texas consumers.”
Those offerings will be available in 6-packs and single-serve cans.
Lone Star Texas Light, as well as “Local Culture Series” of beers, including Rio Jade Mexican-inspired lager, and Das Bier German-style Kolsch, will also be focal points.
Dragon’s Milk Growing; Against the Grain Partnership to End
Pabst, which has a partnership with Michigan’s New Holland to sell Dragon’s Milk stout, will look to grow distribution of the brand in 2021. This year, the brand is up 15% overall, according to Bruhn.
“So even the loss of the on-premise for Dragon’s Milk hasn’t slowed it down,” he said.
Beyond the stout, Pabst will push to grow distribution for Dragon’s Milk White bourbon barrel-aged white stout.
Pabst’s other craft partnership, with Against the Grain in Louisville, Kentucky, will wind down at the end of the year. Bruhn said the partnership was no longer financially viable for either party to continue.
Schlitz Hard Seltzer to Test in Atlanta
Pabst is launching an “entry-level” Schlitz branded harder seltzer, first testing the new product in the Atlanta market. Bruhn said the entry isn’t meant to undermine the economics of the seltzer segment.
“That’s not what we’re trying to achieve,” he explained. “That being said, we sit on a large volume pool of malt liquor, and our concern is that if we don’t have something ready to go, then the malt liquor category will be stolen by Natty Seltzer.”
Cheaper hard seltzers are already hitting the market. Costco club stores have added 24-packs of Kirkland branded hard seltzer, which retail for $18.